Criminal Defense Lawyers

Can I Get Arrested for PPP Loan Fraud?

Can You Get Arrested for PPP Loan Fraud?

The short answer is yes, you can get arrested for PPP loan fraud. The Paycheck Protection Program (PPP) was created in 2020 to provide small businesses with loans to help them through the COVID-19 pandemic. However, some business owners abused the program and pocketed the money illegally. PPP loan fraud is a federal crime that can lead to serious consequences like fines, restitution payments, and even prison time.

What is PPP Loan Fraud?

PPP loan fraud typically involves making false statements on a PPP loan application in order to receive loan funds that the business is not actually eligible for or entitled to. Common schemes include:

• Claiming to have more employees or higher payroll expenses than the business really does in order to qualify for a larger loan amount
• Using PPP funds for personal purchases or other non-business expenses
• Lying about the number of employees being retained as a result of the PPP loan
• Applying for multiple PPP loans for the same business by submitting applications to different lenders

Essentially, any misrepresentation made in the PPP loan application process aimed at wrongfully obtaining funds can be considered fraud.

PPP Loan Fraud Penalties

PPP loan fraud is a federal crime that can lead to serious criminal penalties. The specific charges and sentences depend on the nature of the offense. Possible consequences include:

• Wire fraud – Up to 20 years in prison and a fine of up to $250,000
• Bank fraud – Up to 30 years in prison and a fine of up to $1 million
• Making false statements – Up to 5 years in prison and a fine of up to $250,000
• Money laundering – Up to 20 years in prison and significant fines
• Restitution payments – Having to pay back all misused PPP loan funds

Prosecutors tend to pursue jail time in cases where defendants deliberately committed fraud for personal gain. However, even accidental misuse of funds or misunderstanding of rules can result in stiff fines or restitution payments.

Recent PPP Loan Fraud Arrest Examples

Authorities have been ramping up investigations and charges for PPP loan fraud over the past couple years. Here are some notable recent cases:

• A Texas man was arrested on 6 counts of wire fraud, bank fraud, false statements, and engaging in illegal monetary transactions after allegedly securing $24.8 million in PPP loans and misusing a significant portion of funds on personal purchases
• 10 defendants in Southern California were indicted for allegedly participating in a scheme to submit fraudulent loan applications under false business names to steal $150 million in PPP loans
• A Rhode Island woman was sentenced to over 3 years in federal prison for fraudulently obtaining over $500,000 in COVID-19 relief funds and spending it on an SUV, designer items, and other personal purchases

These cases highlight how seriously the government is taking PPP loan fraud. Those who abuse pandemic relief programs for personal gain are facing years behind bars along with other steep penalties.

Christine Twomey

2024-03-21

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Brendan huisman

2024-03-18

Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!

Guerline Menard

2024-03-18

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2024-03-15

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2024-03-15

I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!

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2024-03-12

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2024-03-12

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2024-02-28

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2024-02-24

I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

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Can You Get Arrested Before Being Charged or Convicted?

Yes, it is possible to get arrested for alleged PPP loan fraud even before formal charges or a conviction. Law enforcement agencies like the FBI generally have authority to make arrests if they have probable cause to believe federal laws were violated.So for instance, if investigators uncover evidence strongly indicating you engaged in fraud when applying for PPP loans, they may seek a warrant for your arrest. You would then have to fight the allegations in court to ultimately be cleared of charges. An experienced white collar criminal defense lawyer can help argue against unwarranted arrests.

How to Avoid Jail Time for PPP Loan Non-Compliance

If you are worried about potential PPP loan issues, working with an attorney to get into compliance ASAP is critical for avoiding criminal prosecution. An attorney can help you:

• Thoroughly audit PPP loan documentation and spending to identify any problems
• Address innocent mistakes upfront before they trigger an audit or investigation
• Negotiate amicable return of funds through the SBA safe harbor program if previous spending is deemed ineligible
• Craft a persuasive argument to prosecutors explaining mitigating factors if charges do get filed

Voluntarily getting into compliance shows good faith effort to correct errors. In cases of unintentional misuse of funds or misunderstanding of rules, this good faith can be critical in avoiding criminal charges.An experienced federal defense lawyer may also be able to get pretrial diversion or a deferred prosecution agreement so that charges eventually get dismissed and cleared from your record if you comply with conditions like repayment of loans. This can help avoid the devastating consequences of a criminal conviction.

Consult with a Defense Attorney If Facing PPP Fraud Allegations

Facing allegations or charges of PPP loan fraud can be an extremely unsettling and high-stakes situation. The potential penalties are severe, and you need skilled legal advocacy to mitigate damages.Schedule a consultation with an experienced federal defense lawyer as soon as possible if you are being investigated or arrested. An attorney can carefully assess your case, advise on the best defense strategies, and start building arguments to help achieve the best possible resolution. With skilled representation fighting on your behalf, potential penalties may be reduced or even avoided entirely in some cases. Don’t wait to seek expert legal help.

Resources

• SBA page on PPP loan reviews and audits
• Tips for responding to PPP loan audits or investigations
• Overview of federal fraud charges and penalties